Advance Opinions

From the New Mexico Supreme Court and Court of Appeals

From the New Mexico Court of Appeals

Opinion Number: 2022-NMCA-048

No: A-1-CA-37852 (December 6, 2021)

HIGH DESERT RECOVERY, LLC, Protestant-Appellant, v.

NEW MEXICO TAXATION & REVENUE DEPARTMENT, Respondent-Appellee.

APPEAL FROM THE ADMINISTRATIVE HEARINGS OFFICE

Dee Dee Hoxie, Hearing Officer

Sanchez, Mowrer & Desiderio, P.C.

Robert J. Desiderio

Isaac S. Emmanuel Albuquerque, NM

Betzer, Roybal & Eisenberg, P.C.

Benjamin C. Roybal Albuquerque, NM for Appellant

Hector H. Balderas, Attorney General

Cordelia Friedman, Special Assistant Attorney General Santa Fe, NM for Appellee

Opinion

HANISEE, Chief Judge.

{1} This appeal concerns the State’s effort to collect unpaid gross receipts taxes from High Desert Recovery, LLC (High Desert). High Desert appeals from an Administrative Hearing Officer’s (AHO) decision and order (the Order) determining it to be a successor in business, as well as a mere continuation, of West Rock Incorporated (WRI) and concluding that High Desert is liable for $127,764.92 in back taxes assessed to WRI. We affirm.

Background

{2} WRI was formed in 1995 as a threemember LLC. Although not a shareholder himself, Daniel Brown acted as a board member, the president, and the manager of WRI’s daily operations. Brown additionally owned and leased a facility to WRI located at an address on Franciscan Street NE in Albuquerque, New Mexico, at which WRI conducted its automobile repossession business.

{3} In 2008, the Taxation and Revenue Department (the Department) assessed WRI for unpaid gross receipts taxes and interest for approximately $270,000. WRI protested the assessment, and an order denying the protest was filed in April 2013. On May 31, 2013, Brown formed High Desert as a single-member LLC, providing his personal P.O. Box address as High Desert’s mailing address and listing an address on Cherry Hills Road in Albuquerque, New Mexico as its “place of business.” On October 16 and 17, 2013, High Desert purchased two new tow trucks and provided WRI’s Franciscan Street NE address in its title application. On October 25, 2013, High Desert applied for a warrant application that would allow it to perform repossessions using the Cherry Hills Road address. The application listed ownership of a single tow truck and identified two employees—Brown and a driver who was still employed by WRI.

{4} Upon approval of its application, High Desert purchased an additional tow truck from WRI for $700, the fair market value of which was later determined by the De- http://www.nmcompcomm.us/ partment of Motor Vehicles (MVD) to be $14,720, for purposes of calculating excise tax from the transfer. In this transaction, as well as the related title application and registration, High Desert provided the Cherry Hills Road address. High Desert also used WRI’s liability insurance policy number to register its newly acquired tow trucks. In March 2014, Brown terminated WRI’s lease on the Franciscan Street NE address and WRI passed a resolution to dissolve. Later that same year, High Desert filed a change of address with the transportation division, indicating that it would begin operating from the Franciscan Street NE address. As was the case with WRI, Brown also leased the Franciscan Street NE property to High Desert.

{5} On November 28, 2016, the Department assessed High Desert, as a successor in business to and a mere continuation of WRI, for a total of $271,359.77, of which $143,594.85 was interest. The Department ultimately abated the interest portion. High Desert protested the assessment, which the AHO denied in full. This appeal followed.

Discussion

{6} On appeal, High Desert asserts that (1) the AHO erred in determining that High Desert is a successor in business to WRI; (2) the AHO erred in determining that High Desert is a mere continuation of WRI; and (3) High Desert is entitled to recover attorney fees because the Department’s position contradicts binding precedent.

Standard of Review

{7} Since the issue presented is one of statutory interpretation regarding the meaning of NMSA 1978, Section 7-1-61 (2017), we review the Order de novo. See A&W Rests., Inc. v. Tax’n & Revenue Dep’t, 2018-NMCA-069, ¶ 6, 429 P.3d 976 (“The meaning of language used in a statute is a question of law that we review de novo.” (internal quotation marks and citation omitted)). While we are not bound by the AHO’s interpretation of the statute, this Court will set aside the Order only if it is: “(1) arbitrary, capricious or an abuse of discretion; (2) not supported by substantial evidence in the record; or (3) otherwise not in accordance with the law.” NMSA 1978, § 7-1-25(C) (2015); see Stockton v. N.M. Tax’n & Revenue Dep’t, 2007-NMCA-071, ¶ 8, 141 N.M. 860, 161 P.3d 905 (same) (internal quotation marks and citation omitted).

{8} “Our primary goal [in interpreting a statute] is to give effect to the intent of the Legislature.” Sacred Garden, Inc. v. N.M. Tax’n & Revenue Dep’t , 2021-NMCA038, ¶ 5, 495 P.3d 576 (alteration, internal